how can banks transform?

What does digital transformation mean to banks and financial institutions?

Right now, it means using digital technologies to accelerate change within the organization, mostly applying digital technologies to current processes and products. Maybe it means a new app that modernizes the banking experience. Perhaps it’s a new credit card which is mostly virtual but also comes in a snappy titanium form factor when you want to buy something from a Luddite store that doesn’t take Apple Pay. Maybe it’s a way to help your customer to apply for a mortgage online.

When you think that this is real digital transformation, then you are wrong.

Today’s digital technologies have made such a fundamental impact on our customer’s core desires, that they have knocked them off their axis. In a few short years, technology has created a new generation of customers who no longer wish to undertake the tasks we make them go through to use our product.

They just want it to work and work in an automated and smooth way as possible. Do you think that your customers enjoy paying bills? Do you think that if you just made bill pay easier, then it would be ok? What if I told you that what you should be doing is eliminating bill pay. When we put artificial barriers between our customers and what they want, we create drag.

Customers hate nothing worse than drag. Customers want to complete specific tasks when they come to you – and most of those tasks have a customer intended result. We may know the results, or at least infer the effect, but then we don’t go the extra mile to do the task on behalf of the customer.

For example, if we find out that our customer is looking for a new home, do we automatically file for a pre-approval and tell them what they can afford? If we find out that a customer has lost her job, do we help her find a new one, or at least another source of income?

In short, do we go above and beyond our role as a bank or financial institution to fulfill the customer’s desires, or do we stop at what we can do as a bank or financial institution? A future bank would fade into nothingness; it would become a low-level process in the stack, where a customer’s virtual assistant performs all banking on behalf of the customer, only surfacing to ask the customer when it doesn’t understand something.

Take bill pay, for instance. I would love to automate my bill pay, but I don’t since I want to make sure that the bills are accurate. I would pay for a service that scans every incoming bill for anomalies and then alerts me only when a defect is found. Otherwise, it just pays my bill.

Over time, just like a Nest thermometer, it will learn my patterns of earning, spending, and banking money, and can then start to take over all of the banking tasks I do drearily today.

Eventually, I no longer “bank,” and just let my virtual assistant handle that. Do banks then have to pitch to virtual assistants? Will customers even think about or care which “bank” (if any) they use? No, they will not. Without action to expand financial institutions’ mandate beyond only banking, they will not survive.

Banks need to evolve by understanding their customer core desires – beyond money management – and then exceed those desires. Banks need to become more than just banks – just like every company needs to step out of their comfort zone and meet their customers on the customer’s terms.

Until that happens – we can never honestly say that we are serving the customer the way they wish to be served.


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